I suppose this song is about the dropping of the atomic bomb on Hiroshima, because U2's influence for this song and album came from seeing a display called The Unforgetable Fire consisting of artwork done by victims of Hiroshima and Nagasaki, althought it also sounds like a pure love song.
Isaac Lee icleeucdavis.edu (contributed before the 20:th of February 1998)
The exhibit that inspired the name was probably the Peace Museum in Chicago's exhibit The Unforgettable Fire. U2 did not see the exhibit but did see some catalogues from the exhibit.
Thanks to "Matt" for directing me to Giving Peace A Chance.
Jonas Steverud (Maintainer of U2MoL) (24th January 2011)